SUBLEASE AGREEMENT
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THIS SUBLEASE AGREEMENT entered into this 27 th day of October, 1997, by
and between UNITED GROCERS, INC., an Oregon corporation, hereinafter designated
as Sublessor, and Xxxxxx'x Foodliner, Inc. , hereinafter jointly and severally
designated as Sublessee;
W I T N E S S E T H
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WHEREAS, the Sublessor has entered into a Lease dated July 15 , 1987----,
with X.X. Xxxxxxxxx Ranch , for a supermarket located in Eugene , Oregon (more
particularly described in exhibit "A" attached to said lease), commencing on the
date set forth in the attached Exhibit "A," a copy of which is hereby
incorporated by reference, as fully as if its terms and conditions were herein
set forth.
WHEREAS, Sublessees desire to sublet said premises for a period not to
exceed 20 years, commencing on date set forth in paragraphs 8 and 10 of Exhibit
"A," and Sublessor is willing to so sublet in accordance with the terms and
conditions hereinafter set forth; now, therefore,
IT IS HEREBY AGREED as follows:
(1) Sublessor hereby sublets unto Sublessees those premises described in
said Exhibit "A," for the term of 20 years.
1.1 The Sublessees, so long as they are not in default hereunder and
further provided that no event or condition exists that, with the passage of
time or giving of notice would constitute default, shall be granted the right to
exercise the renewal options contained in Exhibit "A," as set forth in paragraph
5 of said Exhibit.
(2) Sublessees covenant and agree to pay for the whole of said term the
rental hereinafter provided, together with all affirmative covenants including,
without limitation, those pertaining to minimum rent, Common Area Charges (CAM),
percentage of gross sales, taxes, assessments, insurance and all of the
covenants and obligations to be performed by Lessee, as set forth in said
Exhibit "A," and to make such payments and provide such performance when due by
the terms of the lease and amendments thereto.
(3) Sublessees shall, upon execution hereof, pay any and all rental or
security deposits and all other sums except minimum rent, as required pursuant
to the terms and conditions of said Exhibits "A", and shall pay rent to
Sublessor, in accordance with the "Sublease Rent Schedule" attached hereto. All
such rental payments to Sublessor shall be made without offset, adjustment or
deduction of any kind.
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(4) Sublessees shall be bound by the same responsibilities, rights,
privileges and duties as Sublessor, as enumerated in Exhibit "A" and covenants
and agrees to fully indemnify and hold Sublessor harmless from any and all
responsibility and/or liability which Sublessor may incur by virtue of said
Exhibit "A," and/or Sublessees' occupancy of the premises. Furthermore,
Sublessees shall be bound by any subsequent amendment, revision, supplement or
addition to the prime lease between Sublessor and the prime Lessor, and to keep
the Sublessor indemnified against all actions, claims and demands whatsoever in
respect to said exhibit "A," and Sublessees use of the demised premises.
4.1 Assignment and Subletting. Sublessees acknowledge that provisions
for extension options and assignment and subletting in the Lease are applicable
to the prime Lessor and Sublessor only. Sublessees will not assign this Sublease
or sublet the premises without the prior written consent of Sublessor which may
be granted or withheld in its absolute discretion. A direct or indirect transfer
of ownership and control of a majority of the voting stock of a corporate
Sublessees, by whatever demands, shall be deemed an assignment of this Sublease
for the purposes of this paragraph.
(a) In the event of an assignment, Tenant shall thereafter pay to
Landlord in connection with such assignment, fifty percent (50%) of all sums and
other consideration paid (or payable) to and for the benefit of Tenant by the
Transferee on account of the assignment as and when such sums and other
consideration are paid (or are payable) by the Transferee.
(b) In the event the transfer is by virtue of a sublease, fifty
percent (50%) of any rent or other consideration received by Tenant, either
initially or over the term of the sublease, in excess of such rent called for
hereunder, or in the case of a sublease of a portion of the Leased Premises, in
excess of such rent fairly allocable to such portion, after appropriate
adjustments to ensure that all other payments called for hereunder are taken
into account, shall be paid by tenant to Landlord, promptly after its receipt by
Tenant.
4.2 Covenants, Representations and Warranties.
(a) Membership in United Grocers, Inc. Upon execution and during
the term hereof, Sublessees agree to maintain or cause to be maintained the
membership of the store in good standing in United Grocers, in accordance with
the Bylaws of United Grocers, as long as this Sublease remains in effect.
(b) Purchases from Sublessor. Sublessees agree that throughout
the term of the Sublease and any extensions or renewals thereof, except as
hereinafter provided, Sublessees will purchase
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from Sublessor not less than fifty-eight percent (58%) of its retail sales of
all goods and merchandise required by it for resale on the premises to the
extent that Sublessor shall now or hereafter be able to supply such goods and
merchandise to the Sublessees, and Sublessor will supply all of Sublessees'
requirements at such prices and on such terms as are reasonably comparable to
those offered by Sublessor to other purchasers from Sublessor carrying on
businesses similar to that of the Sublessees in the Eugene, Oregon area. If, at
any time, the Sublessees contend that Sublessor is not able to supply particular
goods or merchandise customarily stocked by retail supermarkets in the Eugene,
Oregon area, or that terms offered by Sublessor are not reasonably comparable to
those offered by Sublessor to other purchasers described above, the Sublessees
shall so advise Sublessor in writing, specifying such contention with
particularity. If, within 30 days after receipt of such notice, Sublessor does
not offer to supply goods or merchandise so specified or does not advise
Sublessees that the terms and conditions offered are reasonably comparable to
those offered to such other purchasers, Sublessees shall be free to secure such
specified goods and merchandise from any source which it desires. If Sublessor
demonstrates that it is offering reasonably comparable terms, and Sublessees
nonetheless purchase from another source, such purchase or purchases shall not
be an exception from the 58% requirement specified above. If the above
percentage requirements are not complied with, it shall constitute a default
hereunder. In the event of a breach of this purchase covenant, Sublessor may
terminate this sublease and, in addition to the remedies hereinafter offered
Sublessor, Sublessee agrees to pay Sublessor, as liquidated damages, and not as
a penalty or forfeiture, a sum computed as follows:
1. The average weekly purchases from the date of the agreement to the
date of the breach shall be determined;
2. the average weekly purchases so determined shall then be multiplied
by the number of weeks from the date of the breach to the end of the term
of the purchase agreement; and
3. The computed sum shall be multiplied by two and one-quarter percent
(2-1/4 %) to determine the liquidated damages due and owing Sublessor by
reason of Sublessee's default. Said sum shall become immediately due and
owing within 15 days from date of written notice of the liquidated damages.
(c) Sublessees covenant that as long as this Sublease remains in
effect, and for an additional period of six (6) months thereafter, Sublessees
shall not directly or indirectly sell or permit the sale of the store and the
owners of Sublessees shall not directly or indirectly sell controlling interests
in Sublessees (whether in one or a series of related transactions) without first
offering to sell said store or controlling interest, as the case may be, to
Sublessor upon the same terms and conditions as the Sublessees or their owners,
as the case may be, are prepared to
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accept from a third party. Prior to such sale by the Sublessees or their owners,
the Sublessees shall first notify Sublessor of the desire to sell the store or
controlling interest in the Sublessees and of all the terms and conditions of
such sale and shall provide to Sublessor all documents, instruments, agreements,
offers, acceptances, appraisals, inventories, equipment lists, leases, financial
statements and such other material and information as Sublessor may reasonably
request to aid in its decision to exercise or decline its right to purchase as
hereinafter provided. Within 30 days following receipt of such notice of desire
to sell and all materials and information reasonably requested by Sublessor,
Sublessor shall advise Sublessees whether Sublessor elects to purchase or
declines to purchase the store or such controlling interest upon the offered
terms and conditions. If Sublessor shall elect to purchase, Sublessor shall
purchase and the Sublessees or their owners shall sell, such retail grocery
business or such controlling interest, as the case may be, all on the terms set
forth in the offer. If Sublessor declines the purchase, the Sublessees or their
owners shall be free to sell the store or controlling interest, as the case may
be, upon (and only upon) the terms and conditions offered as aforesaid to
Sublessor; provided that such sale is consummated within 120 days following the
date Sublessor declined the purchase, and if such sale is not consummated in
accordance with the offered terms and conditions within said 120-day period, the
provisions of this paragraph shall apply again and no subsequent sale of any
portion of the offered store or controlling interest may be effected without
again offering the same to Sublessor as provided herein. Sublessor may waive its
rights under this section provided such waiver is in writing. The foregoing
provisions shall not apply to transfers of assets or interests by sale, gift or
as a result of death to the lawful issue of Sublessees, or transfers of assets
to a corporation or partnership or transfers of a controlling interest to a
trust as long as such corporation, partnership or trust is controlled by the
transferor; provided such transferee agrees that it holds such assets or
controlling interest subject to the restrictions contained in this paragraph.
(d) Sublessees represent and warrant that there are no brokers,
finders or other persons entitled to any fee, commission or other compensation
in connection with this Sublease, and agree to hold Sublessor harmless from any
claims for such fees, commissions and/or compensation.
(e) Sublessees hereby represent and warrant to Sublessor that the
financial statements, appraisals and other documents submitted to Sublessor in
connection herewith or pursuant hereto are and shall be true, correct, complete
and accurate in every respect and said financial statements fairly and
accurately present the assets, liabilities, financial condition and results of
operations reflected herein.
(5) Security Agreement.
5.1 Grant, Collateral and Obligations. Sublessees and Sublessor agree
that this Sublease shall constitute a security agreement within the meaning of
the Oregon Uniform Commercial Code (hereinafter referred to as the "Code") with
respect to:
(a) required cash deposits (as defined in the Bylaws of
Sublessor) presently or hereafter held by or deposited with Sublessor by
Sublessees;
(b) any and all patronage rebates and rebate notes representing
patronage rebates (as defined in the Bylaws of Sublessor) earned or hereafter
earned by reason of patronage of Sublessor by Sublessees;
(c) subject to liens securing purchase money financing therefor
as described in Exhibit "X," all trade, store and other fixtures and all
leasehold improvements and all equipment and other personal property of
Sublessees used or useful in the operation of the store in or on the premises,
whether now owned or hereafter acquired including, without limitation, the
property described in Exhibit "Y", attached hereto, if any; and
(d) all replacements of substitutions for, and additions to the
foregoing, and the proceeds thereof (all of said personal property and the
replacements, substitutions and additions thereto and the proceeds thereof being
sometimes hereinafter collectively referred to as the "Collateral"), and that a
security interest in and to the Collateral is hereby granted to the Sublessor,
and the Collateral and all of the Sublessees' right, title and interest therein
are hereby assigned to the Sublessor, all to secure all presently existing or
hereafter incurred direct, indirect, absolute or contingent indebtedness,
liabilities and other obligations of Sublessees to Sublessor (referred to as
"the Obligations" herein) including, but not limited to, the payment of all rent
and other sums and the performance of all other obligations of Sublessees under
this Sublease, all renewals and extensions thereof, the price of goods, services
and merchandise purchased by Sublessees from Sublessor from time to time, and
all costs of collection, legal expenses and attorneys' fees paid or incurred by
Sublessor in enforcing any rights in respect to the Obligations or in connection
with assembling, collecting, selling or otherwise dealing with or realizing upon
the Collateral.
5.2 Security Agreement Warranties. In addition to and without limiting
the force or effect of any other covenants, representations and warranties of
Sublessees contained in this Sublease, Sublessees hereby covenant, represent and
warrant to and with Sublessor as follows:
(a) Sublessees are the owners of the Collateral free and clear of
liens, security interests and encumbrances of every kind and description, except
liens, security interests and encumbrances securing indebtedness to Sublessor
and liens described on Exhibit "X," hereto to which Secured Party has consented
("Permitted Liens").
(b) Sublessees will not sell, dispose of, encumber or permit any
other security interest, lien or encumbrance to attach to the Collateral except
the security interest of Sublessor and the Permitted Liens.
(c) All tangible Collateral shall be kept at Sublessees' place(s)
of business located on the premises, and Sublessees shall not permit the same to
be removed therefrom without the prior written consent of Sublessor.
(d) Sublessees shall keep the tangible Collateral at all times
insured against risks of loss or damage by fire (including so-called extended
coverage), theft and such other casualties as Sublessor may reasonably require,
all in such amounts, under such forms of policies, upon such terms, for such
periods and written by such companies or underwriters as Sublessor may approve.
All such policies of insurance shall name Sublessor as loss payee thereon as its
interest may appear and shall provide for at least 30 days' prior written notice
of modification or cancellation to Sublessor. Sublessees shall furnish Sublessor
with certificates of such insurance or other evidence satisfactory to Sublessor
as to compliance with the provisions of this paragraph. Sublessor may act as
attorney-in-fact for Sublessees in making, adjusting and settling claims under
and canceling such insurance and endorsing Sublessees' name on any drafts drawn
by insurers of the Collateral.
(e) Sublessees will keep the Collateral in good order and repair,
shall not waste or destroy the Collateral or any part thereof, and shall not use
the Collateral in violation of any statute, ordinance or policy of insurance
thereon. Sublessor may examine and inspect the Collateral at any reasonable time
or times, wherever located.
(f) Sublessees will pay promptly when due all taxes and
assessments upon the Collateral or for its use or operation or upon this
Sublease or upon any instruments evidencing the Obligations.
(g) Sublessees will pay promptly when due all indebtedness
secured by any lien or other security interest in the Collateral, whether
superior or junior to the security interest established hereby.
5.3 Additional Remedies. Upon any default hereunder and at any time
thereafter (such default not having previously been cured), Sublessor at its
option may declare all Obligations immediately due and payable and shall have
the remedies of a secured party under the Uniform Commercial Code of Oregon (the
"Code"), including without limitation the right to take immediate and exclusive
possession of the Collateral.
5.4 Financing Statements. Sublessees will at their own cost and
expense, upon demand, furnish to Sublessor such financing statements and other
documents in form satisfactory to Sublessor and will do all such acts and things
as Sublessor may at any time or from time to time request or as may be necessary
or appropriate to establish and maintain a perfected security interest in the
Collateral.
5.5 Attorneys' Fees. In the event of the institution of any suit or
action to terminate this Sublease, or to enforce the terms or provisions hereto,
Sublessees shall and do hereby agree to pay, in addition to the costs and
disbursements provided by statute, reasonable attorneys' fees in such
proceedings or on any appeal from any judgment or decree entered therein.
(6) Default. The following shall constitute a default under this Sublease:
6.1 Any failure by Sublessees to pay, when due, rent or any other
amount due under the Lease or to perform any other obligation of Sublessor under
the Lease or any other default under the Lease which continues for up to
one-half of the cure period as defined in the lease, provided with respect
thereto in the Lease;
6.2 Any failure by Sublessees to pay when due rent or any other amount
due under this Sublease or to perform when due any other obligation of
Sublessees hereunder;
6.3 If any warranty, representation or statement made or furnished to
Sublessor by or on behalf of the Sublessees is false in any material respect
when made or furnished;
6.4 Any failure by Sublessees to pay when due and/or satisfy any other
present or hereinafter incurred indebtedness or obligation of Sublessees to
Sublessor, including but not limited to those arising from Sublessees' purchases
of goods and services from Sublessor any other loans or leases Sublessees may
have or enter into with Sublessor, and Sublessees' obligations under the Bylaws
of Sublessor and its application for membership in Sublessor;
6.5 If Sublessees vacate or abandon the premises or allow the premises
to remain vacant or unoccupied;
6.6 If Sublessees make an assignment for the benefit of creditors, or
if, with or without Sublessees' acquiescence, a petition in bankruptcy is filed
against Sublessees, or Sublessees are adjudicated a bankrupt or insolvent, or a
trustee, receiver or liquidator is appointed for all or part of Sublessees'
assets, or a petition or answer is filed by or against Sublessees seeking or
acquiescing in any reorganization, liquidation or similar relief under any
federal, state or local law relating to bankruptcy, insolvency or other relief
for debtors; and
6.7 If Sublessees sell or otherwise dispose of all or any substantial
portion of the assets of Sublessees located at or associated with the store,
other than inventory sold at retail in the ordinary course of business.
(7) Remedies. In the event of any default under this Sublease:
7.1 Sublessor shall have the right, at its election then or at any
time thereafter, upon notice to Sublessees, to terminate this Sublease or to
terminate Sublessees' rights of possession in the premises without terminating
this Sublease;
7.2 Sublessor shall have the immediate right, whether or not the
Sublease shall have been terminated pursuant to paragraph 7.1, to re-enter and
repossess the premises or any part thereof by force, summary proceedings,
ejectment or any other legal or equitable process, all without any liability on
Sublessor's part for such entry, repossession or removal;
7.3 Sublessor may (but shall be under no obligation to), whether or
not this Sublease shall have been terminated pursuant to paragraph 7.1, resublet
the premises, or any part thereof, in the name of Sublessees, Sublessor or
otherwise, without notice to Sublessees, for such term or terms and for such
uses as Sublessor, in its absolute discretion, may determine and may collect and
receive rents payable by reason of such resubletting (without any liability for
any failure to collect such rents);
7.4 Sublessor may (but shall be under no obligation to) procure any
insurance, pay any rentals, taxes or liens, make any repairs, pay any sums
required to be paid, and to do and perform such other acts as may be required of
Sublessees hereunder, and any payments so made shall bear interest at the rate
of 12 percent per annum from the time of such payment until repaid; and
7.5 Sublessor may exercise any and all other rights and remedies
afforded to the prime Lessor upon default under the Lease and any and all other
rights and remedies Sublessor may have as provided herein, pursuant to the laws
of the State of Oregon-------. In addition to the other remedies provided above,
Sublessor shall be entitled to current damages and final damages as provided in
paragraph (8) below, and, to the extent permitted by applicable law, to
injunctive relief in case of the violation, or attempted or threatened
violation, of any of the provisions of this Sublease, or to a decree compelling
performance of this Sublease.
7.6 No expiration or termination of this Sublease, repossession of the
premises or any part thereof, or resubletting of the premises or any part
thereof, whether pursuant to the above paragraph or by operation of law or
otherwise, shall relieve Sublessees of their liabilities and obligations under
this Sublease, all of which shall survive such expiration, termination,
repossession or resubletting.
(8) Damages.
8.1 Current Damages. In the event of any expiration or termination of
this Sublease or repossession of the premises or any part thereof by reason of
the occurrence of an event of default, Sublessees will pay to Sublessor the rent
and other sums required to be paid by Sublessees for the period to and including
the date of such expiration, termination or repossession; and, thereafter, until
the end of what would have been the term in the absence of such expiration,
termination or repossession, and whether or not the premises or any part thereof
shall have been resublet, Sublessees shall be liable to Sublessor for, and shall
pay to Sublessor, as liquidated and agreed current damages the rent and other
sums which would be payable under this Sublease by Sublessees in the absence of
such expiration, termination or repossession, less the net proceeds, if any, of
any resubletting effected for the account of Sublessees, after deducting from
such proceeds all of Sublessor's expenses reasonably incurred in connection with
such resubletting (including, without limitation, all repossession costs,
brokerage commissions, legal expenses, attorney's fees, employee expenses,
alteration costs and expenses of preparation for such resubletting). Sublessees
will pay such current damages on the days on which rent would have been payable
under this Sublease in the absence of such expiration, termination or
repossession, and Sublessor shall be entitled to recover the same from
Sublessees on each such day.
8.2 Final Damages. At any time after any such expiration or
termination of this Sublease or repossession of the premises or any part thereof
by reason of the occurrence of an event of default, whether or not Sublessor
shall have collected any current damages pursuant to paragraph 8.1, Sublessor
shall be entitled to recover from Sublessees, and Sublessees will pay to
Sublessor on demand, as and for liquidated and agreed final damages for
Sublessees' default and in lieu of all current damages beyond the date of such
demand (it being agreed that it would be impracticable or extremely difficult to
fix the actual damages), an amount equal to the excess, if any, of (a) the rent
and other sums which would be payable under this Sublease from the date of such
demand (or, if it be earlier, the date to which Sublessees shall have satisfied
in full their obligations under paragraph 8.1 to pay current damages) for what
would be the then unexpired term in the absence of such expiration, termination
or repossession, discounted to present value at an assumed interest rate of
seven percent (7%) per annum, over (b) the then net rental value of the premises
discounted to present value at an assumed interest rate of seven percent (7%)
per annum for the same period. Rental value shall be established by reference to
the terms and conditions upon which Sublessor resublets the premises if such
resubletting is accomplished within a reasonable period of time after such
expiration, termination or repossession, and otherwise established on the basis
of Sublessor's estimates and assumptions of fact regarding market and other
relevant circumstances, which shall govern unless shown to be erroneous. If any
statute or rule of law shall validly limit the amount of such liquidated final
damages to less than the amount above agreed upon, Sublessor shall be entitled
to the maximum amount allowable under such statute or rule of law.
(9) Rights Cumulative, Nonwaiver. No right or remedy herein conferred
upon or reserved to Sublessor is intended to be exclusive of any other right or
remedy, and each and every right and remedy shall be cumulative and in addition
to any other right or remedy given hereunder or now or hereafter existing at law
or in equity or by statute. The failure of Sublessor to insist at any time upon
the strict performance of any covenant or agreement or to exercise any option,
right, power or remedy contained in this Sublease shall not be construed as a
waiver or relinquishment thereof for the future. No waiver by Sublessor of any
provision of this Sublease shall be deemed to have been made whether due in the
receipt of rent or otherwise, unless expressed in writing and signed by
Sublessor.
(10) Notices. Any notice or demand required or permitted to be given
under this Sublease shall be deemed to have been properly given when, and only
when, the same is in writing and has been deposited in the United States Mail,
with postage prepaid, to be forwarded by registered or certified mail and
addressed to the party to be notified at the address appearing below its
signature. Such addresses may be changed from time to time by serving of notice
as above provided.
(11)Right of Refusal: If, during the term of this sublease, or any
extension hereof, Sublessee or any successor to Sublessee shall receive a bona
fide offer to purchase the business being operated under this sublease, i. e.,
goodwill, fixtures and/or equipment and inventory or the property of which the
premises are a part, which offer is acceptable to Sublessee, Sublessor shall
have the right to purchase the business (or the property) upon the same terms
and conditions. Sublessee agrees to immediately, upon receipt of such offer, to
give Sublessor written notice of the terms and conditions thereof, and the
Sublessor shall have the right, for thirty (30) days after receipt of such
notice, to exercise its option to purchase under the identical terms and
conditions of such offer. Sublessor's exercise of its option shall be given in
writing, within said thirty-day period.
(12)Additional Provisions.
12.1
12.2
IN WITNESS WHEREOF, the parties have executed the foregoing Sublease
Agreement the day and year first above written.
SUBLESSOR:
United Grocers, Inc., an Oregon Corporation SUBLESSEES
an Oregon Corporation
0000 XX Xxxx Xxxx -------------------------
Xxxxxxxx, Xxxxxx 00000
By: ------------------------ ---------------------------
SUBLESSEE:
Xxxxxx'x Foodliner, Inc.
an Oregon Corporation
0000 Xxx 00 Xxxxx ------------------------
Xxxxxx, Xxxxxx 00000
By: ------------------------ ---------------------------
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